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Wednesday, June 22, 2016

Insurance Telematics App Adoption Driven by IoT Tech

Sensors in automobiles that produce data for analysis by insurance companies are a compelling use case for Internet of Things (IoT) technologies. The number of Insurance Telematics policies in force on the European market already reached 5.3 million in the fourth quarter of 2015, according to the latest worldwide market study by Berg Insight.

Increasing at a compound annual growth rate (CAGR) of 37.2 percent, that nascent market is expected to reach 25.8 million by 2020. In North America, the number of insurance telematics policies in force is expected to grow at a CAGR of 45.8 percent from 6.3 million in 4Q15 to reach 42.1 million by 2020.

Moreover, the European insurance telematics market is largely dominated by hardwired aftermarket black boxes, while self-install automotive on-board diagnostic (OBD) devices instead represent the vast majority of all active policies in North America.

Automotive Telematics Market Development

Several major U.S. providers of usage-based insurance (UBI) have recently shifted to solutions based on smartphones. Berg Insight now expects a rapid increase in the uptake of solutions based on smartphones and also embedded OEM telematics systems in all markets in the upcoming years.

Renowned telematics suppliers active in the insurance field for example include Octo Telematics, Vodafone Automotive and LexisNexis Risk Solutions. Intelligent Mechatronic Systems, Cambridge Mobile Telematics, Modus, Baseline Telematics, DriveFactor and The Floow are also notable players on the market.

Automotive OEMs are increasingly taking an active part in the ecosystem. Examples include General Motors, Ford, Renault-Nissan, BMW, Daimler and Fiat.

In addition, mobile network operators such as Vodafone, Telefónica, Verizon and Sprint are offering insurance telematics solutions, commonly working with telematics partners. The insurance telematics market is currently in a phase of strong growth in both North America and Europe.

"Canada, the U.S. and Italy in particular have seen a significant increase in the use of telematics-based auto insurance during 2015," said Jonas Wennermark, analyst at Berg Insight.

Insurance Telematics Market Outlook

He adds that the UK market is also one of the front-runners, and adoption is expected to increase in a number of additional countries. Telematics-based insurance has already been introduced in European countries including Spain, Austria, France, Switzerland, Germany, Denmark, Belgium and the Netherlands.

Differentiated telematics offerings are predicted for a broader range of segments, and insurers are increasingly expected to embrace usage-based pricing as well as claims-related insurance telematics and various other value-added services.

In North America, smartphone software app-based solutions are growing rapidly, whereas Europe still largely favors device-based solutions. We're following the key trends within this market and will continue to share details on the emerging market outlook.